Central Vermont Needs More Housing at All Price Points
Interview provided by Tim Heney. Article compiled by Tom Brown.
Tim Heney is a Montpelier native and third-generation broker in the family business, Heney Realtors, and has served on many real estate boards and commissions. The Bridge asked him to assess the current market.
The Bridge: What’s the state of the Central Vermont real estate market today?
Tim Heney: There are 15 properties for sale in Montpelier with maybe a couple of for-sale-by-owner on top of that, but not a lot. They’re ranging in price from $175,750 to $575,000.
Adding in the five towns in the U-32 district, there are only 34 properties listed. So if you moved here right now, that’s the total pool of inventory to choose from. And in the price range you want, it comes down to sometimes one or two.
Does Montpelier need more new housing?
Heney: That is without question. When you talk to employers that are trying to hire people and people walking through our front door, it’s enormously frustrating because we really haven’t created any new housing. For decades we have had a backlog of demand, and the supply is not meeting it.
Is that the number one problem for Central Vermont realtors?
Heney: It’s beyond new housing. There is a lack of higher-priced homes to move up to, to create more movement within the market. Every town is its own little market, and every market has its own dynamic, but the real issue is balance. If you look at everything being built in Montpelier, it’s all been in the affordable sector, and there’s nothing for folks in middle price ranges being created. There’s certainly nothing for nicer, upper-end homes at all. So I think creation of homes in each sector is needed, but it’s always within that concept of balance.
Is it difficult to build new housing in the city?
Heney: Are there places to put them within city limits? Yes, there are. And you could find people who have tested the waters and just found it too difficult. Montpelier had a bit of a reputation as being a difficult place to develop and create any housing or commercial space beyond simply property taxes.
The most recent one that I can think of was when Redstone was looking at the One Taylor Street lot, and at the very end, they pulled out because they couldn’t make the numbers connect. I think the analysis that I heard was that the rents you can generate here are OK but not quite as high as what they would get for the same unit in Chittenden County but the taxes, water, sewer fees, and costs to operate the unit are higher here.
Is permitting more difficult here than in Chittenden County?
Heney: We have never developed there, so the honest answer is I can only guess. I do applaud the fact that the city did a total zoning rewrite and put the new zoning into effect last year, but I still think it is excessively controlling and over-the-top in a lot of areas. I would rather have it be simpler, shorter, and more concise, so that any person who has property could read it and understand what their options are and what they can do. I think they get too into the weeds, trying to control too many details, and that’s not productive.
How have we done with affordable housing?
Heney: We don’t need a lot more affordable housing in our mix at the moment because so much of what’s coming on is that specific thing. The trend that I’ve seen for years is simply the classic thing that you get somebody who has an older, larger home and children grow up and move away, and they downsize. If they can find the right next smallest thing to move to, they sell their bigger house to another family. So just creating affordable units doesn’t open up these other sectors.
Are property taxes a problem?
Heney: If you’re from the Midwest or something, and you come here and see the steep jump, you go nuts. But people want to be here, and the schools are really good, and they want to pay for good schools. I think they make the judgment that, yeah, they’re high, but it’s a good value. I think a lot more people would come here if we had housing for them, which might help us spread that tax burden. That’s one of the reasons why education is the single best investment we can make as a community. And yes, it’s expensive, no doubt about it.
I’ve heard that about 40 percent of Montpelier’s housing stock is in rental units. Is that the right mix or do we need more?
Heney: In the sense that we need more in all sectors of housing, yes. Look at how the world has changed since I was a kid. You think about the families that once moved to town—mom or dad got a job at National Life or something—and they move here. You don’t see that as much anymore; they don’t pick up the whole family anymore. If the kids are happy in school, and the other partner still has a good job they like, sometimes that person will come here to work and go home on weekends. And if we have no housing stock to accommodate that new dynamic in our community, we’re losing them all.
How can we create more turnover in rental ownership?
Heney: I think what happens is that folks who have owned a place long enough and are ready to move on in their lives talk to their accountant and pull back because they realize the implications for them in terms of income tax, so maybe you are paying 26 percent a year and all of a sudden you’re bumped up to a 40 percent bracket. They’ll just keep it and collect the rents.
In that sense, a huge number of resources in our society are held captive by this tax. If we can find a way to clean that up to allow people to transfer assets, then you’d have new owners who would come in and make improvements in energy efficiency and bring a fresh set of objectives.
How do you see the city’s energy efficiency charter change proposal affecting the market?
Heney: Finding a way to do this positively rather than punitively would certainly be my preference. You can create incentives, and I’m not saying giveaways, to soften that or help owners do it. And it doesn’t have to be just residential, especially if you look at our old properties in town and how many don’t even have a really decent (insulation) cap in the attic.
An incentive approach seems to make sense to me, and I think most responsible landlords try to do that. But, you know, it’s just that balance of trying to make it make sense with all the costs going up. Rents go up a little, but not as much right now. Insurance is a big one, going up about 20 percent a year. I don’t think adding more regulation is the answer.